Proper paperwork is necessary for filing any life insurance claim. This is often not a task that will be at the top of the list of things to do when a loved one has passed away. However, beneficiaries should file a life insurance claim to receive the death benefit from a policy.
There are various steps that need to be completed to properly file a claim for the death benefit in a life insurance policy. The one aspect that is necessary is to make sure the process is done correctly.
The First Step
One of the most important aspects of filing any life insurance claim is to make sure you have access to the proper paperwork. The best way to do this is to contact the insurance agent who sold the policy.
An individual can also place a call to the life insurance company. Another thing to keep in mind is a policy may be part of the benefits package from an employer. This means contacting the employer to find out the process for filing a claim.
Cover Your Bases
Many people may not know the type of life insurance policy purchased by a loved one. This could be a friend, a spouse, or other family member. One common type is a group policy which is often offered by employers, various credit card companies, and other entities.
Group policies are typically provided to a customer or employee for free or at a reduced cost. Review a bank statement, credit card statement, or other financial documents to see if there is any life insurance coverage is available.
There are also other types of policies that may have been purchased by an individual. This can include mortgage life insurance, travel life insurance, credit life insurance, and accidental death insurance. Information available about the coverage may be found by reviewing financial information.
One thing that may need to be done is contact any lenders and ask about available death benefits. Most people are not always aware of all types of life insurance coverage that is available.
Gather All Paperwork
The most important document to obtain when filing a life insurance claim is the death certificate. Most times a copy of the death certificate will suffice. A marriage certificate might also be helpful. You have various types of paperwork to decipher when making a claim.
Make sure to have information available from credit card statements, loan paperwork, or employee benefit information. This will be helpful if a discrepancy arises. These documents will act as proof of what an individual owned.
Time Frame For A Claim
Every life insurance company will have a “proof of death” form that needs to be completed when there is a claim for death benefits. This form must be submitted to the life insurance company where a policy was issued.
You will also need to provide a copy of the death certificate with this form. One way to get any needed documents and help with the process is to contact the life insurance agent on the policy.
An individual completing this form may need to complete other forms if tax issues arise.
The processing of all required forms should not take any longer than one week. There is a review of all death benefit claims to ensure all requirements have been met and the policy is valid.
One aspect about life insurance polices is they can be set up to not require any premium payments. However, there could be term policies that may have expired. The processing may take longer if required documents may be missing.
There are various settlement options available for life insurance benefits. Individuals can choose to get a lump sum, interest income, and even a money market mutual fund.
The benefit of a lump sum for the settlement of a death benefit is having money available to pay debts and funeral costs.
If an individual has the option of interest income, then payments are paid from accumulated interest. Any selection for a money market mutual fund will generally pay current market rates.
Another option that may be used for a settlement is to establish an annuity that pays out for a certain time frame.
Payment Plan Benefits
Selecting the proper payment plan will offer various benefits. You will find the options available when a claim for death benefits is filed.
There are some insurance policies that allow a beneficiary to choose a payment option once they are eligible to receive available proceeds. The most common option that is chosen by most beneficiaries is a lump sum payment.
One thing to keep in mind is beneficiaries may be children who are too young to manage money.
Most times this means an interest income or scheduled payment option is beneficial. One aspect to consider when filing a death benefit claim is knowing if a life insurance policy exists.